Answer:
pricing
Explanation:
pricing is the amount you pay a buissness for their product.
Answer:
a. 4.94%
b. 11.48%
Explanation:
Here in this question, we are interested in calculating the pretax cost of debt and cost of equity.
We proceed as follows;
a. From the question;
The debt equity ratio = 1.15
since Equity = 1 ; Then
Total debt + Total equity = 1 + 1.15 = 2.15
Mathematically ;
WACC = Cost of equity x Weight of equity + Pretax Cost of debt x Weight of debt x (1-Tax rate)
Where WACC = 8.6%
Cost of equity = 14%
Weight of equity = 1/(total debt + total equity) = 1/(1+1.15) = 1/2.15
Pretax cost of debt = ?
Weight of debt = debt equity ratio/total cost of debt = 1.15/2.15
Tax rate = 21% = 0.21
Substituting these values, we have;
8.6% = 14% x 1/2.15 + Pretax cost of debt x 1.15/2.15 x (1-21%)
8.6% = 14% x 1/2.15 + Pretax cost of debt x 1.15/2.15 x (1-21%)
Pretax cost debt = (8.6%-6.511628%)/(1.15/2.15 x (1-21%))
Pretax cost of debt = 4.94%
b. WACC = Cost of equity x Weight of equity + After tax Cost of debt x Weight of debt
8.6% = Cost of equity x 1/2.15 + 6.1% x 1.15/2.15
Cost of equity = (8.6%-3.26279%)/(1/2.15)
Cost of equity = 11.48%
Answer:
Unitary Contribution margin= $0.6
Explanation:
Giving the following information:
LMN Company produces a product that sells for $1. The company has production costs of $600,000, half of which are fixed costs. Assuming the production and sales of 750,000 units.
Variable cost= 600,000/2= $300,000
Unitary variable cost= 300,000/750,000= $0.4
Unitary Contribution margin= 1 - 0.4= $0.6
Total contribution margin= $450,000
To become industrial, a nation must have raw materials, workers
and capital is absolutely true. Without any of the things mentioned, it is
impossible to become an industrial nation. The raw materials are required to
produce the finished product. The workers are the ones that work in industries
to produce the finished proudest from the raw materials. It can be physical as
well as mental labor. Capital is required to buy raw materials and labor for
getting the finished product and make profit.
Answer:
Ke = Rf + β(Rm – Rf)
Ke = 4.5 + 1.20(12-4.5)
Ke = 4.5 + 9
Ke = 13.5%
Explanation:
Cost of equity is equal to risk-free rate plus market risk premium. Market risk premium is beta multiplied by risk premium. Risk premium is market return minus risk-free rate.
